Challenges Abound as the UC Channel Undergoes Transformation

UC Channel Partner Challenges and ObjectivesMost telecom VARs, SIs and consultants recognize the need to change and evolve along with their customers’ needs and architectures. However, transformation is a difficult process and requires a lot of support from the entire eco-system. As partners look to develop new skills and adjust their business models to become more competitive, they need a compelling vision and roadmap from their vendors, strong financial incentives, as well as clearly defined “rules of the road”.

We surveyed 79 telecom and IT VARs, SIs and consultants. The goal was to identify partner challenges and objectives, as well as specific expectations for vendor support with customer and partner financial constraints, rapid technology evolution, and shifting vendor business models.

Unfortunately, only a little over 26% of channel respondents believe their vendors have been “most supportive” with the challenges presented by the recession and the technology trends taking place in the marketplace.

It is not surprising that our channel partner survey identified financial constraints and price pressures as the top challenges faced by telecom resellers and consultants in 2009. Some vendors were more successful than others in providing their channel and customers with compelling leasing programs and financial incentives to help with the adverse economic conditions. Close to 90% of partners indicated their top objective was stimulating demand through creative packaging and leasing programs, and 77% were looking to secure additional financing.

Furthermore, partners wish to receive greater support from their vendors in terms of lead sharing (76% of partners) and larger discounts (almost 55%). If vendors can step in with compelling channel incentives, they can ensure greater partner loyalty and help them weather the economic slump more successfully.

However, the survey revealed that partners are also facing challenges related to market structure and vendor relationships. Hosted and cloud services, competition from vendor direct sales, conflicts across channel tiers, and uncertainty about vendor viability and product roadmaps ranked high among partner challenges (between 40% and 60% of respondents).

As vendors look to grow their own market presence, extend customer reach, and diversify their delivery models they are aggressively expanding their channels and tapping into hosted/cloud services. These strategies can potentially be very effective for the respective vendors; however, they need to be properly executed, with clearly identified tiers of competition and roles within the evolving value chain. Competing for the same accounts through hosted services or direct sales will certainly alienate partners and may even confuse customers. Enabling VARs and SIs to deliver hosted or managed services can help create a more viable eco-system where vendors and partners benefit equally from the growing penetration of new delivery models.

UC, Virtualization and Cloud Technologies to Drive Transformation in the ChannelGoing forward, as communications and IT become even more closely integrated, the market consolidates further, and UC technologies mature, channels will be increasingly important. The value chain will also evolve as vendors seek to reposition themselves to compete more successfully. Some will choose to become one-stop shops for applications and will leverage channel partners for implementation; others will find it more feasible to focus on niche application markets (e.g. contact center) but also deliver integration services in complex UC environments. Finally, cloud computing and cloud-based communications will gradually have a disruptive impact on the value chain, as vendors compete with their own VARs through service provider partners or hosted offerings delivered out of their own data centers.

Similar to in-house IT organizations, channel partners will experience a change in their roles, as they move from selling products to selling more complex solutions. Not only are channel partners tasked with helping enterprises through various technical challenges, but they also need to possess the business acumen to recommend a mix of resources that is most beneficial for the customer organization. For both businesses and partners, acquiring and/or developing the right talent will be key for success going forward.

Vendors and partners need to deploy a more consultative approach in marketing and selling next-generation communications solutions. Partners will need to help their customers address a series of important questions in deciding whether and/or how to deploy UC, virtualization or cloud architectures, such as the following:

What is the existing infrastructure - e.g. age, type (TDM or IP) and capabilities of installed voice and data equipment; what needs to be upgraded/replaced; how much is on the premises and how much is hosted, etc.?

Is the enterprise a multisite business? Does it require a mix of on-premises telephony for some locations, and a cloud service for other?

Should it plan for spikes in usage at certain times of the year? What type of business is it (e.g. subject to seasonality, etc.)?

What is the user mix – in terms of geographical locations, mobility, use of communications, etc.?

How is the internal IT organization structured and what are its skills and capabilities?

What kind of advanced communications capabilities are required? Should the business consider deploying a collaboration platform? Can their network support it?

Partners must be able to address the technical needs of an organization based on its business needs. Because there is so much choice for enterprises, partners need to be able to have the business conversation first in order to be able to deliver greater value to customers and gain a competitive advantage.

Vertical Skills and Expertise to Help Partners Carve Out Competitive NichesDemand for advanced technologies and UC varies by vertical. Financial services were hard hit by the recession, but generally are at the forefront of technology adoption. Healthcare, on the other hand, is a safe harbor during tough economic times. In addition to overall sensitivity to fluctuations in macroeconomic conditions, verticals also have some specific technology needs and preferences. For example, verticals with multiple, geographically dispersed locations (such as doctor’s offices, professional and financial services firms, and real-estate), as well government and education, typically prefer to outsource some or all of their communications and IT infrastructure and management and are therefore good candidates for hosted and managed services.

Healthcare, retail, manufacturing and hospitality, on the other hand, have traditionally offered the largest opportunities for indoor mobility. Most vertical industries have demand for specialized vertical apps – either customized off-the-shelf technologies or custom solutions built from scratch. The ability to develop such applications or integrate horizontal communications solutions with existing vertical-specific infrastructure or business processes (for CEBP) can provide channel partners with a competitive differentiator. As vendors spread their nets too thin, they will rely on partners to help them attack each vertical with a more customized approach and will seek out those VARs and SIs that have already developed relationships and expertise in specific verticals.

The SMB Market to Remain a Key Partner DomainThe more consolidated the marketplace and the more complex the new technologies and architectures become, the more difficult it is for vendors to successfully penetrate the fragmented SMB market on their own. Therefore, partners can continue to focus on developing competitive skills in that segment. They should seek to understand SMB investment criteria and work with the vendors to develop strategies that address these specific preferences. Local relationships and superior customer service will be key for partner success as they have little influence over other factors such as solution prices and features/capabilities. SMBs have traditionally received little attention from the vendors and the large SIs and VARs, which gives smaller local interconnects an opportunity to offer unique value. Rather than treating all SMBs with a cookie-cutter approach, they can take the time to understand their specific needs and use a more consultative approach in deploying and managing their communications and IT infrastructure.